Another hurdle for the EU’s Emission Trading System

The Stockholm Environment Institute published a sobering report stating that a large number carbon offsetting projects under the EU’s ETS may have made no difference or even increased emissions.

The EU’s Emission Trading System (ETS), is often seen as the silver bullet to decarbonise Europe’s economy by creating a market for carbon. Considerable energy was put by the EU institutions into reforming ETS to increase its very low carbon price, thereby making it an effective decarbonisation tool.

The Stockholm Environment Institute’s findings are a new cause for concern about the functioning of ETS. According to its findings drawn from a group sample of projects, the Joint Implementation (JI) tool may have financed a large quantity of projects with a poor environmental record.  While JI projects are carried out worldwide under the Kyoto Protocol, the EU is particularly exposed as it used over 2/3 of the total JI credits bought to date as it is explained in the report.

Among its many recipients, JI credits were also used to finance several biogas projects in Europe which are listed in JI’s official website. If the trustworthiness of JI and ETS are undermined, this may result in less funding opportunities for renewables. This would be a wasted opportunity for anaerobic digestion, a sector that not only can bring high GHG emission reductions, but which can also in create thousands of jobs, reduce resource dependence, foster sustainable waste management and produce renewable products in the form of energy and organic fertilisers. For that reason, it is essential to make the necessary reforms to ensure that only projects with strong environmental credentials can obtain funding.